• Former Coinbase Employee, Ishan Wahi, recently pleaded guilty to charges of insider trading.
• The scheme occurred more than two years ago in October 2020 and involved purchasing tokens prior to their listing on the Coinbase platform.
• He is set to be sentenced in May and is the first person to be found guilty of insider trading involving cryptocurrency markets.
Former Coinbase Employee Pleads Guilty
The Department of Justice (DOJ) has reported that Ishan Wahi, a former product manager at Coinbase, has pled guilty to two counts of conspiracy to commit wire fraud for his involvement in an insider trading scheme. He is the first person ever found guilty of such a crime within the cryptocurrency markets.
Details of Insider Trading Scheme
The scheme was orchestrated by Wahi and started more than two years ago in October 2020. It involved obtaining data regarding which tokens were due to be listed on the popular trading platform – knowing that this would cause their prices to rise – and then getting his brother and a friend involved in buying them before they became officially listed. When their prices rose upon listing, they would then sell the assets at a profit, boosting the strength of their portfolios.
Brother Nikhil Found Guilty Earlier This Year
In January 2021, Nikhil – the brother of Wahi – was found guilty for his involvement in this scam and was issued a financial penalty totaling just under $900k as well as an order for him to serve roughly ten months in prison. However, as Ishan was closer linked with Coinbase and likely initiated this plan himself, it is expected that he will receive a harsher sentence when he appears before court again in May 2023.
Statement from U.S Attorney Damian Williams
U.S Attorney Damian Williams commented: “Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets… Whether it occurs in the equity markets or crypto markets… stealing confidential business information for your own personal profit or profit of others is a serious federal crime”.
This marks yet another difficult chapter for Coinbase who have endured a bad run of luck over recent months following several high-profile security breaches occurring on its exchange platforms during 2020/2021